Now that real estate listing company Trulia’s (TRLA) IPO is safely and profitably launched, a lot of investors are wondering if they should grab some shares too, particularly since the U.S. housing market is finally seeing some action. But the better question for those interested in such things is: why wouldn’t you buy Zillow (Z) instead?

Trulia and Zillow compete for dollars from real estate professionals by offering home sale and rental information – mainly listings with lots of pictures and value estimators – at websites that are free to the public. Both companies are adding viewers by the millions and lots of revenue too. For investors, the key difference so far is that Zillow makes money doing this and Trulia does not. Zillow investors have done particularly well this year, as seen in this stock chart.

Zillow is the second most popular website for home sale listings behind Yahoo Real Estate, and it has an agreement with Yahoo (YHOO) to run all of its listings there too. The company was quick to jump on the mobile revolution. Its apps with all those photos, specs and contacts for any given house, are the most popular among people in the market. Similar tools for renters, including a Zestimate for a reasonable rental rate, are catching on. Zillow’s second quarter revenue is up 75% over the same period a year earlier. In results published since its IPO in July 2011, profits are way up too.

Zillow’s share price valuations are astronomical on just about any metric. They get a PE ratio of more than 200; and a price sales ratio of more than 13. Here’s how they look on a couple of other valuation metrics:

Are Trulia’s tools enticing enough to compete with Zillow’s strong foothold? For my own home, which is not for sale, Trulia shows the picture of someone else’s house. Trulia does list schools near my address, but the site doesn’t explain that unless the homeowner wins a public school lottery (literally), his children will be assigned to the one with an abysmal rating. Questions appear to be answered by advertisers; hardly the unbiased or helpful insight one might expect from social media. (What area has good schools? Five agents helpfully direct the asker to the school district’s website.) The crime statistics incorporate my entire, rather crime-ridden county, which definitely does not help the reputation of my quite uneventful neighborhood.

Perhaps such critiques are irrelevant. What investors really see here are two tiny companies well-positioned in a very large market that will only get bigger with a housing recovery. These share prices suggest that investors believe the market is big enough for both of them. They also suggest that these are shares for investors comfortable with more speculative plays. At these valuations, even profits don’t go too far in lowering the risk.

But that hasn’t stopped most analysts who follow Zillow from issuing buy recommendations on the shares. With Zillow’s annual revenue not yet breaking $90 million, those followers believe Zillow still has a lot to gain with a recovering real estate sector. The real estate industry estimates that about $24 billion will be spent on U.S. home marketing this year. The tools on both sites help homeowners sell property without the help of Zillow and Trulia, but this irony has not seemed to hurt business yet. Any pick up in home sales like we’ve seen lately is good news for both companies.

Trulia, too, sells stuff to real estate professionals that gets them leads by offering a lot of information to consumers for free that they can see on computers and mobile devices. It
gets about two-thirds as much traffic as Zillow and hasn’t been profitable yet. As of June 30, it had a deficit of $43.8 million, according to its SEC filings, and currently ranks fourth for usage behind Move Inc.’s (MOVE) Realtor.com site.

But its sales have almost doubled in each of the past two years. Its backers – and these include Accel, Fayez Sarofim & Co. and Sequoia Capital -- believe the site will attract more viewers largely by incorporating community information and user-generated feedback into the site. The company’s prospectus describes Trulia as a site more likely to attract prequalified buyers more ready to act than those on Zillow. In fact, Trulia believes its viewers don’t look at Zillow at all.

Trulia went public at $17 a share in a $75 million IPO on Aug. 31, and the price jumped 41% in one day. It’s slid a bit as questions crept in over whether a company with $38.5 million in sales last year is really worthy of a $600 million-plus market cap.